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Commentary & Analysis

Packaging and Labels: Is Technology the Primary Driver for Change?

In his new role as Senior Editor of Packaging and Labels, David will be looking at the demands, technologies and the inflection points that are driving the use and growth of digital packaging and labels. The shift from analog to digital production in this area has already started, with the real growth ahead of us. In this article, David takes a look at the some of the drivers and constraints for migration from conventional to digital processes in packaging and label production. There are more moving parts than you might expect.

By David Zwang
Published: February 21, 2017

The benefits of digital technology in print production have long been demonstrated, and we see them in the increased analog-to-digital conversion rates in many print applications. While electrophotography (EP), was the early entry technology and is still the major contributor of volume and value in the digital market conversion, production inkjet is now growing more rapidly. According to a recent Smithers Pira study, The Future of Digital Printing to 2024, “Inkjet is forecast to overtake electro-photography after 2019; and by 2024, inkjet will account for 56% of the value and 53% of the digital print volume”. Although, putting it in perspective, keep in mind that digital print volume is still less than 50% of the total volume as compared to analog. We know that there are many document printing applications, like direct mail and commercial print, that are transitioning to or already settled into fully digital print production. However, this journey has been more of an evolution than a revolution, primarily due to the development pace of the digital technologies, tempered by market education, acceptance and demand. Some of these same developments in digital technology are likely to translate to packaging production, and there is significant overall growth projected.

Let’s look more closely at packaging and label production. Unlike document printing and distribution which can be replaced by online and mobile channels, printed packaging is not only required but consumption is increasing with population growth, regularly increasing the demand. Global packaging production in general is projected to maintain an annual growth rate of approximately 3.5%, but how much of that growth or of the estimated $900 billon market size can be expected to transition to digital, and more importantly, in what period of time?

Some of the same drivers that have driven the growth of digital print applications have a place in packaging and label production, although when you start to look at the rest of the drivers and constraints, many of those benefits may be outweighed by disadvantages. We will look deeper into those in future articles.

For now, however, it is important to remember that labels and packaging are not just two applications. In each of those categories, there is a subset, each with its own set of requirements, whether it be media, ink, post production, etc. Digital label production was the first to begin to make the move to digital for limited applications. Over time, we have seen additional label application requirements met, increasing both the volume and type of digital label production being adopted as a result of technological and materials innovation. Yet even with those increases, in a significant amount of cases, the cost of digital production vs. that of analog still is the determining factor for the lack of transition.

According to a recent Printing Industries of America report, “Packaging industry application in the market is expected to witness the fastest growth, at a CAGR of over 12% from 2016 to 2024. Growing demand for low migration UV cured inks in food & beverage as well as other consumer goods packaging is likely to augment growth over the projected period. Furthermore, stringent regulations restricting the use solvent based inks in packaging application owing to its VOC content is expected to promote demand for UV curable inks.”

The number of application subsets in packaging are even greater than in labels, and the transition process started later. Some of the growth in that area will also come from new or redesigned forms of packaging. The automated corrugated packaging solution showcased in Cary Sherburne’s WhatTheyThink article last week is one example of technology redefining and enhancing packaging production. However, that solution currently addresses a fairly limited need. The use of flexible packaging, combined with new digital production techniques are an early indication of what opportunities will lie ahead as innovation continues, costs relative to analog go down, and market development and acceptance go up.

Next week we will look at the potential demand for high barrier pouches and another opportunity for how digital printing might play.

More to Come …

I would like to address your interests and concerns in future articles as it relates to Packaging and Labels. Please feel free to contact me at david@zwang.com with any questions or suggestions.

David Zwang travels around the globe helping companies increase their productivity, margins and market reach. He specializes in production optimization, strategic business planning, market analysis, and related services to companies in the vertical media communications market. Clients have included printers, manufacturers, retailers, publishers, premedia and US Government agencies. He can be reached at david@zwang.com.

 

Discussion

By chris jordan on Feb 21, 2017

Hi David, your article is one that is exercising many minds particularly suppliers. Since the early 90's with EFI I have participated in the many changes in digital presses. The number of suppliers targeting packaging and labels is far beyond that of the early digital race. My fear is that due to the significant supplier competition many products will be launched early, and many printers do not know how to evaluate these new products.

 

By David L. Zwang on Feb 21, 2017

Hi Chris
I totally understand your point and concern. Suppliers are looking for the growth areas, and packaging and 'industrial print' (definition to come...) are the prime targets. One of the reasons I decided to take the Label and Packaging section of WTT on is to try to bring some clarity to the printers and converters. More education and less hype...

 

By Dharminder Biharie on Feb 23, 2017

Hello David,

I think the most printers will confuse the business plan with a business model to make digital packaging business. The opportunity is definitive there. Only you need to unlock the potential.
Digital has always been there to solve a logistic and/or marketing problem for the customer's customer.
If you invest in digital packaging defensive (price, specs, speed, etc.) you will end up with doing commoditize services. You don't buy a new iPhone 6, 7 and 8 (?) to make only phone calls. Right? No one received extra phone calls and text messages with a fancy new iPhone. No printer will get extra business with a new piece of iron. You have to make your business model work. Not your business plan.
Successful digital packaging companies will invest progressively. They will use platform models and understand the needs of the new generation. And they will have an excellent logistic and marketing solving service. Service is hard to beat when executed well. I work as a business development manager at Xerox Europe. My comment based on experience I have. I can notice that success full companies have adopted the internet. I hope more companies will adopt the power of internet and platform business. Also in packaging.

 

By David L. Zwang on Feb 23, 2017

You can use digital technology to reduce cost, or to add value. This is something we have seen repeated time and time again. There will undoubtedly be many cases of both as we move further into the realm of digital packaging....

 

By Dharminder Biharie on Feb 23, 2017

Hi David,

But the big difference is today: platform business driven companies who have graphics arts history. Some of them will outperform the traditional ones. The world has changed. The "old" way of doing things is under pressure. Look at hotel and taxi business.

 

By Martin Bailey on Feb 24, 2017

If I can say this without understating the challenges remaining for digital print in packaging and label: the actual print step is usually not the biggest hurdle to overcome; all the rest of the workflow also needs to adapt to many more, much shorter, jobs per shift if the full benefit of digital print is to be achieved. Companies pushing to shorter and shorter run-lengths on flexo presses are already encountering many of these. Digital print is an enabling technology for the types of job that many brand owners and converters are moving towards for a variety of reasons, and many of the obstacles are more associated with those other changes than with the printing technology being used.

 

By David L. Zwang on Feb 24, 2017

Martin. You are absolutely spot on. If we look at digital document publishing, it was the developments in design and prepress that really helped drive the actual print technology development. We will be addressing just those requirements that will further drive digital packaging production in future articles.

 

By Martin Bailey on Feb 24, 2017

Great, thanks Dave. Looking forward to it!

 

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Label & Packaging Section

Jennifer Matt

David Zwang, Editor/Analyst
David travels the globe helping companies increase their productivity, margins and market reach.

 

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